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Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

nytimes.com

331–340 of 544 posts

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#331
post #275

Earlier quoted context omitted.

>They are explicitly a product to facilitate money laundering How is HN so consistently cryptophobic? Imagine the reaction you’d get here suggesting say, E2EE is “explicitly a product for {crime}”. You’d be rightly mocked, but throw in crypto and it’s like 75% of the people here lose basic reasoning skills. I’d be less frustrated if it wasn’t so common.

No, it’s like saying E2EE encryption is designed to secure private communications between two parties, which is what it’s designed to do. Mixers are designed to facilitate money laundering. You can claim it’s for legitimate privacy, etc but it doesn’t change the fact that it’s money laundering.

I have no horse in this race and pardon my nitpicking but those two phrases are not equivalent.

For E2EE,you describe the base level capability: Secure message between two parties.

For Mixers, you describe an act that the capability of making money hard to trace enables: Money laundering. If you applied a similar argument to E2EE (as many have and will keep doing), encrypted communications are a way for people to do illegal things away from the eyes of the law. Trade illegal items, send banned/illegal/questionable content, etc.

From a pure capability standpoint, mixers, like E2EE, are a way to secure XYZ activity (Which happens to be money transfer) from prying eyes.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#332

I think my crypto info is behind the times. Can someone explain to me why people don't just exchange crypto for monero and then back if they want to "wash" it?

Generally you need to use a custodial exchange to do this, which creates a point of failure/censorship. Doing this onchain / trustlessly on protocols such as thor have significant liquidity limits afaik.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#333
post #3

Banning a service because it "might be used for illegal purposes" is insufficient. This is a problem with law enforcement in general: they are lazy and seek to have automated solutions to so much of what used to be called police work. This applies to warrant-less wiretaps, pulling information on people from 3rd party data brokers to side-step warrant and FOIA requirements, and more. I would rather money-launderers ge…

At this point, failure to comply with the statute means a violation of law; regardless if any criminal laws were observably broken or not.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#334
post #125

I think the crypto framing obscures the story here. If the government issued sanctions against a traditional financial organization engaged in money laundering, and then Goldman Sachs bankrolled a lawsuit arguing that the organization is allowed to engage in money laundering due to some quirk of the organizational structure, everyone would understand what's going on and nobody outside of the finance industry would be…

The sanctioned entity here is a piece of code that uses zk-SNARK cryptography, in a permissionless and immutable way. There are no admin keys, there is no ownership, it is code. It's not an organization. This is more like the FBI banning GPG because terrorists use it. FTA: > They contend that the Treasury Department lacks the authority to restrict access to a software program. This is the point. No one would have bat…

Tornado Cash is obviously an organization. This was clear from their website before it was taken down, and you can still see from their Medium blog history (https://tornado-cash.medium.com/) that they consider themselves to be a "we" who can take reports, make governance proposals, etc. The people who've told you otherwise are playing shell games (and sometimes outright lying) to advance their financial interests.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#335

Earlier quoted context omitted.

Also, with PoS coming in a few days, the game changes. IIUC, stakers will be obligated to validate all (valid) transactions unless they are willing to forfeit their staked ETH... No preferential treatment anymore. (This is still new to me, please correct me if I'm wrong)

If the vast majority of stakers agree to OFAC regulations (which appears to be the case) then the end result is censorship.

What gives the appearance that this is the case?

Even if the "vast majority" of stakers agree with the regulation, the regulation is ambiguous as to whether stakers are expected to refrain from including TC transactions in their own blocks, or actively orphan all blocks that include TC transactions. The latter hurts their staking revenue and effectuates a soft fork. (Staking revenue is hurt due to the inactivity correlation factor that the network uses to calculate rewards.)

If the regulation only demands the former, then the network will continue status-quo, except that TC transactions may take a couple minutes to be included instead of 12 seconds.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#336

Earlier quoted context omitted.

Of course its attractive to criminals. Same reason they love cash. Doesn't mean that we should ban cash

> ban cash Well, it's not banned, but over $10k USD in cash you need to fill out an IRS form 8300 [1] precisely to curb criminal use of cash. (Although I'd argue it should be upped and pegged to inflation as 10k isn't what 10k used to be.) [1] https://www.irs.gov/businesses/small-businesses-self-employe...

Wouldn't filing a form 8300 be unconstitutional violation of the 5th amendment if the cash is an element of the crime of both parties? As an example, felons can't be charged with NFA violations for owning a short barrel rifle for example because registering their firearm would be self-incrimination. I believe Timothy Leary also got out of being charged with Marijuana reporting [tax] requirement because filing for the tax would self-incriminate his possession.

Edit: See https://en.wikipedia.org/wiki/Haynes_v._United_States for NFA. Thanks below for Leary.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#337

Mixers never fail to astonish me. They are explicitly a product to facilitate money laundering. They are marketed as a way to wash illicit funds. And then the folks who run them get mad when law enforcement tries to shut them down?

VPNs are "data mixers" - by combining all your traffic with others, it becomes harder to determine who sent which packets. Honestly, why can't we just have the government know every single website we visit immediately? We all have nothing to hide

"Data laundering" is not against the law though; money laundering is

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#338
post #272

Earlier quoted context omitted.

And you're buying into propaganda suggesting someone pushing the envelope in cryptography is creating tooling specifically for money laundering. 30 years ago, the NSA toed a similar line in their war on PGP, saying it was used in practice for "money laundering, child pornography, and terrorism" - https://reason.com/video/2020/10/21/cryptowars-gilmore-zimme...

Well it probably was, among other things. But we're censoring a network here, not just a tool. Nobody is making the cryptography behind Tornado illegal.

The open source software and cryptographic protocol is implicitly targeted with this order. You can see it in how private companies are now handling the Tornado Cash code and contributor accounts. If you create a similar privacy tool with zk-SNARKs do you really think it won’t also become a target for sanctions in time?

This is known as “chilling effect” in a legal context.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#339

Earlier quoted context omitted.

Just going to point out that Tornado cash did invoke chainalysis oracles for all of their interface tools. The problem is that on ethereum it's not possible to censor a deployed contract. There is a possibility that miners could collude not to authenticate blocks with tornado cash transactions in them, but that gets into some interesting game theory in a globally distributed system. Not every miner is subject to US l…

The onus is for technology to comply with laws, not the other way around.

Tell that to Uber.

Re: Investors sue Treasury Department for blacklisting crypto platform Tornado Cash

#340

Earlier quoted context omitted.

Banks store money, right? Does bitcoin store money? Banks have accounts, right? Does bitcoin have accounts?

> Banks store money, right? Does bitcoin store money? You mean physically? Plenty of banks (especially online banks and investment banks) don't physically store any more cash than something like a jewelry store. Physical storage is hardly a core characteristic of banking; I've never been to a branch of any of my current banks. If you don't mean physically, I can't see how this is different than "have accounts"... > B…

> Does bitcoin store money?

still waiting.

> How is a bitcoin address meaningfully different from an account?

Well, for one, it's only an address. Not a ledger.

Bitcoin transactions point money at one or more address. Transactions, you might argue, are one-off ledgers. But then bitcoin is just a collection of those transactions & relevant/necessary data to support them them, compiled & validated using a variety of mathematic calculations.

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